UK pension insurance deals jump to record $50 bln in 2019, more in pipeline-advisers

* Market seen at 30-40 bln stg in 2020

* New firm Langhorne Re plans to reinsure UK bulk annuities

* Pension superfunds, other new products seen next year

* Deal for 11 bln stg British Steel scheme expected in 2020

By Carolyn Cohn

LONDON, Dec 13 (Reuters) - The UK bulk annuity market, which
involves insurers taking on the risk of company pension schemes,
has soared to record levels above 40 billion pounds ($51
billion) in 2019 and is expected to stay strong as costs fall,
advisers said.

Bulk annuities have proved a revenue-earner for FTSE 100
insurers such as Legal & General and Aviva, with
unlisted firms Pension Insurance Corporation and Rothesay Life
also among the eight providers.

The deals are designed to help companies tackle deficits in
Britain's two trillion pound defined benefit, or final salary
pension sector. They remove pension risk from companies' balance
sheets, making it easier to raise debt or merge with others.

The pension funding problem is Europe-wide, as years of
central bank stimulus have depressed interest rates, leading to
gaps between the fixed sums the pension schemes pay out and
their investment income.

In Britain, most defined benefit pension schemes are shut to
new members. As existing members age, it becomes easier for
insurers to price the risk, reducing the cost of a bulk annuity.

"The market seems to be running at full tilt," said Harry
Harper, head of risk transfer at XPS Pensions Group, which
predicts the market to reach 42 billion pounds this year and a
similar amount next, compared with around 25 billion pounds in
2018.

For an interactive version of the graphic, click here https://tmsnrt.rs/2Ph0sdY.

Mercer and Hymans Robertson also said they expected the
market to top 40 billion pounds this year, though Hymans
Robertson saw 2020 volumes falling to 30 billion pounds due to a
smaller number of mega-deals compared with 2019.

Bulk annuities have also attracted over 10 reinsurers to
help insurers share the risk. New reinsurer Langhorne Re has a
pipeline of UK deals, a spokeswoman told Reuters by email.

However, the cost of a bulk annuity remains too high for
many firms, industry sources say.

The market expects competition from pension managers
running a number of schemes together in cheaper so-called
superfunds, for which the regulation is still to be finalised.

L&G is also offering a product that it says is similar to a
superfund.

L&G's new product is likely to see its first deals next
year, Stephan Erasmus, head of client solutions in the insurer's
pension risk transfer team, told a media presentation this week.

Industry sources also expect a mammoth 11 billion pound bulk
annuity deal from the British Steel Pension Scheme next year.
BSPS said in an October consultation it planned to buy a bulk
annuity if its funding level reached 103% on a buy-out basis -
factoring in the cost of insurance.

($1 = 0.7794 pounds)

(Additional reporting by Simon Jessop; Editing by Elaine
Hardcastle)